Failed Medical Group Liquidates Assets
Ventura County’s largest medical group began liquidating its assets Wednesday, but officials said it will be months before doctors and other creditors see a dime of the money they are owed by the failed Family Health Care Medical Group.
“It’s going to be April or May before we could do a distribution,” said Geoffrey Berman, a vice president of Development Specialists Inc., which will oversee the sale of assets and subsequent payments to hundreds of potential creditors.
The Chicago-based company will dissolve the medical group’s financial holdings under a provision in state law known as “general assignment for the benefit of creditors,” which Berman said accomplishes essentially the same thing as a federal Chapter 7 bankruptcy, but with less red tape and without court supervision.
The process will allow the 45 staff doctors who lost their jobs when Family Health Care suddenly folded last week to immediately open new practices. Under federal bankruptcy proceedings, Berman said, their ability to do so might have been delayed and patients might have had to wait longer for their medical records.
But David Tilem, a Glendale bankruptcy attorney who has been following Family Health Care’s collapse, said less red tape also could mean less scrutiny and a slimmer chance that creditors collect the estimated $6 million they are owed.
“They say they are effectively looking out for the rights of creditors, but who is overseeing that?” Tilem said. “There’s less control, regulation, management and oversight. There’s no court supervision.”
Family Health Care spokeswoman Mari Zag said Tilem’s concerns are unwarranted because Berman will act as a neutral referee.
“There’s no way that they represent our organization,” she said of Berman’s company. “It’s a process that’s above reproach.”
Dr. Kenneth Saul of Thousand Oaks, who says he and his partners are owed $32,000, said the legal process is less important to him than making sure that he and other doctors left holding big bills get paid.
He contends that Family Health Care executives were handsomely paid even as the company was going down and that those executives should now pay the tab out of their own pockets, regardless of whether the law requires them to do so.
The state liquidation process does not preclude lawsuits from being brought against individual physicians who were board members or shareholders of Family Health Care, Zag acknowledged. Several contract physicians awaiting payment said they have been in touch with lawyers to discuss potential lawsuits.
Meanwhile, the county has set aside $250,000 in taxpayer money to provide temporary care to former Family Health patients through its public clinics. The county’s efforts could ease the burden on area hospital emergency rooms, which have been absorbing many Family Health Care patients while their insurers attempt to assign new doctors.
Those visiting county clinics in Simi Valley, Moorpark and Thousand Oaks should bring proof of insurance, but do not need to pay money up front, county officials said.
An auctioneer-appraiser already is at work assessing the value of medical equipment, furniture and other assets at Family Health Care’s area offices, Berman said. Those assets will be sold for cash in the coming weeks and the money put into a pool to distribute to creditors. Much of that equipment is expected to be sold to Family Health Care staff physicians, who are in the process of forming new clinics.
But Berman said the real problem lies with managed care providers who owe money to Family Health Care, which served as a middleman between area health plans and 135,000 patients. But collecting even a portion of that money--which Berman estimated is in the millions of dollars--could take months.
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Staff writer Tina Dirmann contributed to this report.
